Mobile taxi fare app startup Karhoo files for bankruptcy protection

23 December 2016

KarhooLondon-based startup providing taxi fare information to travelling public Karhoo has submitted an application with the US court for bankruptcy protection. The company is facing the collection suit in New York rising to be left without over 700 contracts with taxi providers and dispatchers. The company executives alleging they have found a potential buyer for their trademarks and infrastructure ask the US bankruptcy judge to suspend the lawsuit and protect their contracts.

Karhoo was founded two years ago and after intense expansion from London to other cities of England and then to Paris and Singapore found itself with money ending up. Last month the startup took a decision to wind up the operations and laid off about 200 employees waiting for their wages to be paid (1.9 million US dollars), as reported in the filing with the US court in New York.

Business of Karhoo was based on its contracts with taxi cab providers and fleet owners, as Karhoo provided information to passengers and the money collected from the fare was further divided with 90% paid under contracts and the rest taken by Karhoo.

One of the critical points in the Karhoo’s business failure was a promotional scheme, or, at least, its indiscreet implementation by the company officials who distributed promotional codes to everyone. Thus, promotional bookings reached 70% of total bookings by October this year. Besides, the company paid compensation to passengers for fraudulent card transactions resulting in rejections.

Karhoo wants to sell the electronic infrastructure, trademarks and back-end software behind its mobile application to Flit Technologies Ltd. The buyer offers 500 thousand US dollars in cash for the London-based network and swap 10% of its equity for the US-based operations of Karhoo.

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